Massachusetts plans to issue bitcoin consumer advisory

The Massachusetts Office of Consumer Affairs and Business Regulation is planning to issue a consumer advisory on bitcoin in the next two weeks, Undersecretary Barbara Anthony told MarketWatch.

Office of Consumer Affairs and Business Regulation

Barbara Anthony, undersecretary of Consumer Affairs and Business Regulation in Massachusetts

\”We are going to be issuing an advisory indicating the disadvantages and advantages that accompany bitcoin,\” she said in a phone interview. \”We need to impress upon consumers that you do take risk here.\”

Some of the risks she mentioned include bitcoin\’s volatility, the lack of rights under law when paying with bitcoin as opposed to paying with a credit card, and the lack of insurance in the event that bitcoins are stolen.

\”If you’re willing to take the risk, then right now, there’s nothing that prohibits that,\” said Anthony. \”But my concern is that [average] consumers aren\’t really paying attention to the disadvantages that are associated.\”

Bitcoin is a virtual currency that has also been promoted as a payment system. Bitcoin has no central bank; it is created through a process called mining that pits computers against each other in a race to solve cryptographic problems. That crytographic problem also verifies bitcoin transactions.

The decision to issue an advisory was prompted by the recent installation of a bitcoin automated teller machine in Boston\’s South Station, which is near the Office of Consumer Affairs, she said. The bitcoin ATM in South Station is run by the company Liberty Teller, which promises \”bitcoin in under 30 seconds.\” Under Massachusetts law, ATMs must be registered with the state and the Liberty Teller machine has not yet done so, she said. \”We’re taking a look at it to determine whether or not it falls under our ATM registration law or any other banking law that would require that the entity obtain a license,\” said Anthony.

The planned consumer advisory in Massachusetts comes during heightened scrutiny of bitcoin around the globe. Mt. Gox, which was once the dominant bitcoin exchange, filed for bankruptcy on Friday in Japan after wiping its website clean of information and halting trade. Chief Executive Mark Karpeles apologized to investors in a press conference and said the exchange had lost a chunk of bitcoins, including 750,000 from users and 100,000 of its own.

What actions are available to people who have lost bitcoins? \”That\’s why it\’s a risk. There\’s no recourse under law that I\’m aware of,\” said Anthony.

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